Marketing is defined by the American Marketing Association “as the process of planning and carrying out the design, pricing, promotion and the distribution of ideas, goods and services to create exchanges that will satisfy individual and organizational objectives.”(Lancaster, 1998)
A study by (Hogarth-Scott et al., 1996) examined how complex the marketing practiced in small business was and how it is used to strategically gain a competitive advantage over a competitor. Carson (1990) in a longitudinal study of small firms in Belfast area has made a strong contribution to the understanding of market practice of marketing in small firms and concludes that marketing is often seen as peripheral to small firm’s requirements.
Research has found some small businesses use sophisticated marketing strategies and others use no marketing. Small business owners are seen as generalists and should not be expected to change to specialists in marketing.
In their work Fitchew, Stokes and Blackburn (Jack, 1998) aimed to provide an understanding of what marketing means to small business owners and stated that small firms share a number of characteristics differentiating them from larger organizations.
They continued by stating that empirical work suggests that these characteristics lead to a number of marketing problems. To illustrate their point they use the following factors as examples; limited customer base, limited activity, owner/managers marketing competency, lack of formalized planning and evolutionary marketing, and, innovation, niches and gaps.
Jack and Bower (Jack, 1998) found that the firms they studied attributed their success to the product/service supplied, their willingness to adopt to and meet customers requirements, helping to build, maintain and retain customer loyalty and building a marketing strategy around their competitive advantage.
It follows therefore that marketing is particularly relevant to the small business, the use and application may determine the winners from the losers.
The relationship and affinity that many SME owners/managers have with their customer base has frequently been cited as an advantage of the SME sector. For instance Carson (1990) discussed the importance of customer relationships for the small business. Similarly Carson, Crombie, McGowan and Hill (1995) who implied that the best strategy a small business can adopt is to fully appreciate and exploit any existing customer base, prior to attempting an expansion of this base. Similarly, McAuley (Jack, 1998) discussed how important it is for the entrepreneur to be interested in the customer, developing a relationship and building on it over time, not just for the domestic market but also for the internationalization of the small business. This relationship between the firm and the customer is called ‘relationship marketing’
Thus Shani and Chalasani (1992) define relationship marketing as “an integrated effort to identify, maintain, and build up a network with individual consumers and to continuously strengthen the network for the mutual benefit of both sides, through interactive, individualized and value-added contacts over a long period of time”
The aim of this project is to develop an explanatory theory that will associate certain factors to the effectiveness of relationship marketing in small business in Greece. It will seek to determine how relationship marketing can be practiced by small businesses. It will try to further understand the special features of relationship marketing implementation in small businesses. It will also try to highlight the importance of the entrepreneur in practicing relationship marketing.
1. If small business in Greece practice relationship marketing
2. How effectively do small business use relationship marketing in Greece?
3. How important is the entrepreneur in practicing relationship marketing?
4. Are there any other elements that need to be considered in relation to small business use of relationship marketing?
Plan of Investigation
Surveying 2000 SMEs in 1991 and 1995, the study sought to identify the particular factors which small firm owners-managers believe contribute most to their competitive advantage (Cambridge Small Business Research Centre, 1992; Kitson and wilkinson, 1996). In 1991, the main competitive advantage of small firms was found to be ‘personal attention to client needs’, although ‘established reputation’, the provision of specialized expertise’ and ‘product quality’ were also believed to be important factors.
In the marketing domain it is essential for managers and others to keep in close touch with customers to assess their needs and aspirations. It is also beneficial to maintain a long-term relationship with customers. Loyal customers who continue to purchase particular goods or services over time are very attractive to business. The costs of acquiring new customers is considerable and the latter are likely to be more fickle and responsive to marginal additional benefits provided by competitors. Long-term relationships generate a self-sustaining dynamic, which allows each party to weather the storms that arise between interdependent people. (Carson et al., 1995)
In 1990s, the topic of relationship marketing has become one of great interest to both marketing scholars and marketing practitioners. In the increasingly mature and complex markets in which organizations are now operating, building relationships and sustaining then are frequently, ore important than customer acquisition.
McKenna (1991) offers a more strategic view of relationship marketing by putting the customer first and shifting the role of marketing from manipulating the customer (telling and selling) to genuine customer involvement (communicating and sharing the knowledge). Berry (1993), in somewhat broader terms, also has strategic viewpoint on relationship marketing. He stresses that attracting new customers should be viewed only as an intermediate step in the marketing process. Developing closer relationship with these customers and turning them into loyal once are equally important aspects of marketing. Thus he defines relationship marketing as “attracting, maintaining, and-in multi-service-organizations-enhancing customer relationships.”
A considerable amount of work has focused on the relevance and applicability of relationship marketing to all customers and suppliers as well as the limitations of relationship marketing. Blois(1996) examines the conditions under which a customer is willing to become involved in and then to continue a relationship. The customer must be convinced of the overall benefits of the relationship, so that the advantages outweigh the costs of obtaining similar supplies through discrete transactions.
Some researchers have questioned whether relationship marketing practices benefit both customer and supplier. Worthington and Horne (1996) consider whether relationship marketing operates in a mutually beneficial way across customer-supplier with reference to the affinity card industry.
Other researchers, such as Murphy (1996), have examined the financial services industry and found that both customers and suppliers benefit from relationship marketing. For the customer a long-tern relationship helps reduce perceived risk in purchasing financial services, whereas for the supplier it allows enhanced retention rates and therefore improved profitability.
Other academic work by Palmer (1994) explores the role of relationship marketing in the marketing curriculum and the alternative perspectives of relationship marketing held by a sample of U.K managers (Palmer & Mayer, 1996)
Unfortunately there is a lack of research of relationship marketing in SMEs sector. In the vast majority of the academic literature we found out about the importance of relationship marketing in firms and especially in SME. But there is very limited research on how a firm can implement relationship marketing and relationship marketing techniques. In this study we will try to understand how relationship marketing is been practiced in the SMEs sector in Greece. Greece could be a very helpful example as personal relations are very important and quite different to U.K
Also be aware that effective working relationships emerge: (1) when interacting parties communicate openly and regularly; (2) when a degree of trust develops between individuals and groups; (3) when the parties understand the viewpoint of their counterparts; (4) when non-coercive methods of influence are utilized; (5) when those who interact accept their adversaries have a legitimate right to express their point of view; and (6) when joint decision-making is neither unduly emotional nor hard-headed (Carson et al., 1995).
The sampling frame will consist of small manufacturing enterprises in the Attica district of Greece. As Athens, the capital of Greece, is located in Attica, this district contains a high concentration of small enterprises. An estimated population of 4000 SMEs in the district operating in a variety of different manufacturing sectors. ICAP (Greek Business Information Company) will be contacted to generate the sample required from their database. Through the use of stratified random sampling the population is divided into three strata of non-overlapping groups. These are based on the number of employees outlined in the EC February 1996 definition of small businesses. ICAP will carry out three separate searches, draw a random sample from each subset to form the total sample of businesses. Probability sampling will be used to answer the research questions by making inferences from the sample about a population. This sampling technique is used to obtain a representative sample.
Overall research design
A multi-method approach was felt to be the most suitable for this study as “the in depth knowledge of social contexts acquired through qualitative research can be used to inform the design of survey questions for structured interviewing and self competition questionnaires.”(Bryman, 2001). The use of qualitative methods would generate information on individual views and opinions and quantitative to facilitate theory testing. The issues of reliability and generability of qualitative research findings can be overcome through the use of quantitative research at the same time.
This was felt to be appropriate to the research strategy, as in depth understanding of a number of small businesses in Greece would be obtained. It would also enable the understanding of manager’s views and opinions of the implications of relationship marketing strategies.
Interviews are the most appropriate method as they are insightful and able to focus on the relationship between marketing and small businesses. The disadvantage is the bias associated with poor questions, not objective interpretation of results and also time consuming.
The types of interviews to be used are in-depth, face to face as a natural conversation and personal contact can be achieved. They allow exploration, probing of interviewee and story-telling to generate theory. To achieve an equivalence of stimulus the same types of topics will be asked to all participants. The researcher will make sure that the interviewee understands any theoretical concepts used. The final questions will be formed after the literature review. Relevant information on the themes of the interview will be supplied to participants before interviews so they are able to gather appropriate information. This also helps to promote validity and reliability. (Saunders et al., 2000)
Data processing and analysis
Categorization of the themes and sub themes will be developed when reading the data to identify relationships and patterns. Categories are then named using existing theory and parameters will be implemented so no confusion of what is included. The categories will be analyzed to see how they fit together. Unitizing then takes place when the data is assigned to a category through the dissection of the transcripts. Hypotheses will be developed and tested to identify relationships between categories (Saunders et al., 2000).
The most appropriate method is a survey. It will “allow the collection of a large amount of data from a sizeable population in a highly economically way.”(Saunders et al., 2000) It is used to describe population characteristics and to test practices on small business relationship marketing. Other quantitative methods are incompatible with the nature of research and are not selected.
The data collection tools consists of questionnaire, structured observation and structured interviews. In using a questionnaire the data is in a standardized form and comparison can be made easily and quickly. Structured interviews and observations were not selected as it was felt that in depth interviews would generate richer information on the topic.
The questionnaires will be sent by post to the remaining business from the sample.
In designing the questionnaire, time will be spent planing, collecting and analyzing the data required, as you are unable to use prompts to explore further and have only one chance to collect the data. Self-completion questionnaires will be used, as they are inexpensive. As the questionnaire is completed independently the answers will not be contaminated or affected by other people’s opinions. The owners of small businesses are unlikely to have assistants so it is felt that they will fill it in themselves. A disadvantage of a postal survey it is low response rates and incomplete data. This can be solved by attaching a covering letter to the questionnaire explaining the purpose of the study will maximize response rates and the importance of completing it along with a pre paid envelope. The questionnaire is designed with an attractive layout, clear instructions and a minimum number of questions. A reminder will be posted one week after the questionnaire to the sample.
Data processing and analysis
The closed questions will be coded at the design stage. Open questions will be grouped into categories and coded once the questionnaires have been received. A unique identification number will be assigned to each questionnaire to help when checking for errors after inserting data. The computer programme SPSS (Statistical Package for the Social Sciences) will be used to process and analyze the data. The data is manually keyed and stored in the SPSS worksheet. The advantage is that data can be input quickly with few errors. In using the commands available statistical tests can be carried out easily and quickly. (Tukey, 1997). “emphasizes the use of diagrams to explore and understand your data.” (Saunders et al., 2000). The results can then be presented in the form of tables and graphs appropriate to the research questions.
As an external researcher the main weakness is how to gain access to small business, as it could be difficult to negotiate and time consuming. To overcome this the selected businesses will be contacted by telephone and informed of the study and its purpose allowing them to agree to take part in the questionnaire and interviews. Managers will be informed of the value and credibility of the research. The goodwill of the organizations in allowing access will be relied on. A consent form will be constricted and signed by all those participating. All information will be anonymous, as the study does not need to name participants. Appropriate data protection principles will be put in place to maintain confidentiality and privacy. Due to the anonymous nature of questionnaire unique identification numbers will not be used.